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Volvo Says It Can Target Likely Car Buyers on TV, Just Like Web Ads

The car brand says it has sold more cars as the result of laser-targeted TV campaigns

Volvo luxury vehicle
Photo:
Volvo

By Mike Shields

Volvo says it has started delivering TV ads to people who are probably in the market for cars--and actually prefer the kind of luxury cars Volvo makes. And it says it has the data to prove those laser-targeted TV ads are driving sales.

Specifically,
over the past year-plus, Volvo and its media buying partners, Mindshare
and the advanced TV ad specialist group Modi Media, have been running
TV ads specifically aimed at about 12 million households. These
households have members that are likely to be buying cars in the next
few months, based on data from companies like Experian and Acxiom, as well as registration data from the Department of Motor Vehicles, Volvo and its agencies say.

Besides
employing this digital-style targeting, Volvo and its partners say
they’ve been able to track whether the specific households that get
exposed to these ads go out and actually buy cars.

The carmaker
won’t say how many cars it has sold as the result of this tactic but,
throughout this effort, Volvo and its partners have run test and control
groups to gauge the effectiveness of the targeted ads. According to Bodil Eriksson,
executive vice president, marketing, brand & communications at
Volvo Cars North America, the addressable TV efforts have demonstrated a
22% lift in sales in the markets the campaign is running.

Thus,
as this campaign has progressed, Volvo has pumped more money into
addressable TV and taken ad budgets from national TV. The brand now
expects to spend “several million dollars” on addressable TV--the
industry term for delivering TV ads to specific American households
based on their demographics and shopping preferences--this year, or
about half of its TV ad budget, Ms. Eriksson said.

“You always
have this constant argument at a company like ours, ‘does marketing work
or not?’ and it’s really tiring,” she said. “This [tactic] works so
well for us. So we’ve taken down our TV spending a lot as it’s gotten
too expensive for us.”

Instead, Volvo is funneling more ad
budgets to the four pay-TV providers--Cablevision, Dish Network,
AT&T and Comcast Corp.--that are able to provide the level of
targeting and precision it needs. The brand is now able to reach
prospective consumers in markets covering roughly half of the country,
said Tobias Wolf, managing director, client leadership at Mindshare.

To
be sure, Volvo’s media shift hardly represents a sea change in media
buying. The advertiser spent $66.5 million in media last year, according
to Kantar Media, not much considering that auto brands collectively
shelled out $11 billion in media. And by Ms. Eriksson’s admission,
Volvo’s media budget pales compared to other car giants. “We are so
small,” she said. “We have a .3% market share. So even if we double
sales we would still be really tiny. We’re never going to be able to
outspend everybody. So we have to think differently, and have to really
understand who is likely to like what we do and embrace. The beauty
today is we actually have technology that will support this.”

To
get this level of targeting, Modi Media uses data from Experian, which
has collected information on 700 million registered cars in the U.S.
Experian has identified a segment of consumers who were 15 times more
likely to be in the market for a new car based on factors such as the
timing of their last lease and the kind of cars they’ve purchased in the
past, according to Mike Bologna, president Modi Media.

Then,
they matched that data up with car registration data from the Department
of Motor Vehicles to find people that have purchased or leased luxury
cars and--based on historical car shopping patterns--may be soon due to
buy or lease a new one.

Then, that list of consumers is
anonymously matched up with subscriber data from the four different
pay-TV companies. These TV companies are then able to deliver ads to
those households—while other households receive different ads.

“It’s not ‘we think they are watching this,’” said Mr. Wolf. “It’s, ‘we know they are watching this.’”

Or
as Mr. Bologna put it, the set-top boxes only serves an ad when those
households are watching TV, so there’s little chance of ad skipping or
other waste, said Mr. Bologna. “It’s like online advertising.”

Only
unlike online advertising, there are no cookies tracking people on
their computers to see if they end up making purchases after clicking on
ads. Instead, Modi and Mindshare turn again to partners like Experian
to piece together how many people saw the ads and then purchased new
cars during the campaign. They say so far the efforts have delivered a
return in sales that is five times larger than what Volvo spent on
media.

That’s what has Volvo and its partners bullish on addressable TV’s potential to move out of the testing stage.

“This stuff is real, and now it’s scalable,” said Mr. Wolf. “And we can figure out how many cars we sold on the back end.”

So
does that mean that Volvo is about to lead a revolution in precision TV
advertising? Well, the recent blitz from fantasy sports betting
companies says that advertisers blasting messages on TV far and wide is
alive and well. And as Mr. Bologna acknowledges, what Volvo is doing is
not easy. He estimates that currently, agencies need to spend 10 times
as many man hours executing such an addressable TV buy compared to a
national TV campaign. [The process of] simply compiling all the data
from the various partners involved and putting it all into useable
formats is primitive compared to digital ad buying tools, he said.
“There is nothing automated about addressability,” he said.

Mr.
Bologna said that the completion of Charter Communications’ acquisition
of Time Warner Cable has the potential to expand the number of homes
where such advanced TV advertising can happen. But after that “there’s a
lot of infrastructure needed,” he said. “We’re pretty far away from
this becoming” possible in every TV household.

Still, for the
right brand, it’s worth it. “This is going to be an ongoing part of our
plans,” said Ms. Eriksson. “We’re well beyond tests.”

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